United Community Banks, Inc.

Good morning and welcome to United Community Bank's third quarter 2020 earnings call. Hosting the call today are Chairman and Chief Executive Officer Lynn Harten, Chief Financial Officer Jefferson Harrelson, Chief Banking Officer Rich Bradshaw, and Chief Risk Officer Rob Edwards. United's presentation today includes references to operating earnings, pre-tax, pre-credit earnings, and other non-GAAP financial information. For these non-GAAP financial measures, United has provided a reconciliation to the corresponding GAAP financial measure in the financial highlight section of the earnings release, as well as at the end of the investor presentation. Both are included on the website at ucbi.com. Copies of the third quarter's earnings release and investor presentation were filed last night on Form 8K with the SEC, and a replay of this call will be available in the investor relations section of the company's website at ucbi.com. Please be aware that during this call, forward-looking statements may be made by representatives of United. Any forward-looking statement should be considered in the light of risks and uncertainties described on page 3 of the company's 2019 Form 10-K, as well as other information provided by the company in its filings with the SEC and included on its website. At this time, I will turn the call over to Lynn Hartin.

Well, good morning, and thank all of you for joining our call. This was certainly a busy quarter for the company. We closed the acquisition of Seaside National Bank in Florida, and the combination of their earnings and the continued growth of our business led to a record level of pre-tax, pre-provision income for the quarter at slightly over $81 million. Our earnings per share for the quarter came in at 52 cents on a gap basis, 55 cents on an operating basis, which represents a decline from the same period last year, but a significant improvement from last quarter. Our return on assets of 1.07% drove a return on common equity that exceeded 10%, and on an operating basis, our return on assets was 1.14%, and we reached 13.5% in our return on tangible common equity. Our bankers continued to deliver outstanding service, and we were rewarded with 8% annualized loan growth, and 15% annualized deposit growth due to their efforts. At the same time, given the low rate environment, we continue to work to drive down our overall cost of deposits to partially offset the decline that we and the rest of the industry are experiencing in loan and investment securities yields. Our net interest margin fell by 15 basis points during the quarter as a result of the low rate environment. Even with this margin decline, though, our efficiency ratio on an operating basis reached a record for the company at 52%. Credit continues to perform well as our markets rebound from the effects of the COVID-19 shutdown. Loan payment deferrals declined from nearly 16% last quarter to just above 3% at September 30th. It continues to be difficult to predict the future path of credit results, but we're certainly encouraged by the performance of our client base during this time. Both non-performing loans and net charge-offs declined from last quarter and continue to be consistent with pre-COVID levels. Our allowance for credit losses now stands at 1.39% of total loans, excluding PPP loans. So given the environment, this was a strong quarter for the company and reflects great efforts by our team throughout the bank to maintain focus and continue to take care of our customers. I know you'd like to hear more details on the quarter, specifically credit, and I'd like to turn it over to Rob for that now. So, Rob?

Thank you, Lynn, and thank you for being on the call today. I'm going to start my comments on page 7. Our loan portfolio grew by $1.7 billion this quarter, with $1.4 billion coming from Seaside and $227 million coming on a core basis. Excluding Seaside, our loans grew at an 8%, annualized pace. Our loan growth picked up a bit in the quarter as we've been successful in market share takeaway from our lender hires in 2019 and early 2020, and we've also had success in turning many of our new PPP customers into full relationships. Moving on to the allowance for credit losses on page 8, on this slide we provide the initial credit marks and interest rate marks for Seaside. In total, there are $46 million in loan marks for the quarter. In addition to the $46 million, we also set aside a $21.8 million provision in the quarter, which included a $10.7 million CECL provision for Seaside's non-PCD loans, commonly called the double dip. In total, our allowance for credit losses increased by about $30 million, and our allowance for credit losses to loans ratio increased to 1.39%, which we view as healthy. On page nine, we look at credit quality, which was stable in the quarter. Our net charge-offs were improved from last quarter to nine basis points, which included the benefit of strong recoveries. On page 10, we give you a deeper look at our deferrals, which improved significantly from June 30th, and now just represent 3% of our total loans. Through our ongoing review of the top 50 stabilized hotel properties, we have seen an increase in weighted average occupancy to 50% in the third quarter. While we've seen improvement in our hotel and restaurant deferrals, the deferral rate within these two loan books remains higher than other portfolios and amounts to 70% of the total remaining deferrals. I'm also pleased to note that our Navitas deferrals improved to just 2.4% of total Navitas loans. There's additional detail on our Navitas portfolio, our restaurant and hotel books, as well as retail CRE in the appendix, and we're glad to discuss during Q&A if you have any questions. With that, I'll pass it over to Jefferson on capital.